Saturday, March 29, 2008

I can't recommend Michael Perelman's The Invention of Capitalism enough. It destroys the myth that classical economists were against government economic intervention and points out that in order for market capitalism to develop, state power was needed to force a largely self-sufficient society into selling their labor for wages. One thing I noticed while reading the book was a similarity between Smith's views and that of Ron Paul, or even Lou Dobbs. While Dobbs might not share the other two's market fundamentalism, they all have a divisive fetish for the "middle class." And beyond that, they proudly display a very basic understanding of the world. There are good and bad people. Some countries are bad, some aren't. The guy in the middle is always getting screwed, be it by the "illegal" Mexican immigrant or the "new world order." This line of thinking certainly divides the working class. It keeps us fighting each other and/or wasting time and effort on silly conspiracy theories.

Perelman's writings on Smith's populism, and that famous metaphor, are worth quoting at length. From TheInvention of Capitalism, page 208-

I suspect that Smith's work earned much of his popularity because he expressed so eloquently what others deeply felt. Unlike many of the less educated populists, Smith was usually able to sublimate his rage into his charming theory of the invisible hand, in which competition and even aggression is channeled into harmonious actions that better the world. Frequently, cracks appeared in this fantasy, and the harsh reality of the world around him intruded. At such times, we can catch a glimpse of Smith's theory of primitive accumulation.

Smith's vision of the bizarre heroism of the petit bourgeoisie seems to reflect his own rage at those who refused to adopt the values that were so dear to him. Even if Steuart's [Sir James Steuart] language was brutal, I suspect that society has more to fear from the repressed emotions of someone like Smith. His metaphor of the invisible hand may be relevant in this regard. We may equate friendship with an open, outstretched hand, but an invisible hand has something sinister about it. In this spirit, Macbeth requested that the darkness of night, "with thy bloody and invisible hand," cover up the crimes he was about to commit.